Thoughts on buying and selling houses – part one
Moving house in a recession isn't easy unless you're at the bottom of a chain, and have a decent deposit to buy somewhere. And the lack of first-time buyers is exactly what's hampering the UK housing market right now.
The housing market is essentially an enormous pyramid scheme. OK, the analogy doesn't work if you're right at the top in a castle, because unless you keep moving upwards you won't get paid for nothing (unless you get into the murky world of equity release, but that's a whole different ball game). But for those trudging up the pyramid slopes, it's essential that people keep coming in at the bottom with new money. If that happens the whole thing dries up leaving a lot of unhappy homeowners, tradesmen and estate agents (but don't shed a tear for the latter, please).
My wife and I recently accepted an offer on our house, after nine months of it being on the market. And so we began what we thought would be quite a straightforward search for somewhere to live. After all, we reasoned, if nobody's buying houses and we have money available, where's the problem?
Well it turns out that many people are sitting tight, unwilling to put their houses on the market while prices are down. This lack of supply is caused, in part, by lenders demanding high deposits for uncompetitive mortgage rates, meaning new people can't get on the ladder, and also by homeowners unwilling to accept that their house may be worth less than it was at the peak of the market a couple of years ago.
Interestingly, when more people do start entering the market again and put their houses up for sale, a glut of available properties caused by those currently holding off may cause prices to fall even further. Rock/hard place.
Anyway, thankfully we did get a first-time buyer interested in our place, and we can move to a location nearer to where we both work. And we'll leave behind the neighbours' unruly children with nary a tinge of regret.
Tags: housing